I’ve just finished reading “The Myth of the New Deal” by Ronald Radosh. This essay appears in A New History of Leviathan, a collection of essays edited by Murray Rothbard and Ronald Radosh. It is free to download from Mises.org. I very much recommend it as an introductory text to the New Deal.

Radosh focuses his work on the corporatist nature of the New Deal and dismisses the claim that it was the result of populist agitation on the part of America’s unemployed. Rather, Radosh shows that the New Deal was corporatist to the core from its beginning. While its drafters may have sincerely believed they were going to end economic depression in the United States, they were also just as much focused on benefiting their careers in politics and business through massive government intervention in the economy.

Radosh spends some time criticizing the notion made by historians like Carl Degler and Arthur Schlesinger Jr. that the New Deal was “revolutionary” in nature. “Although the New Deal used traditional rhetoric, Degler asserted, ‘in actuality it was a revolutionary response to a revolutionary situation.'”

This is false and Radosh demonstrates how the New Deal was a top down reform meant to preserve, rather than change, the corporatist status quo, that is, the corporate dominance of the US economy. He asks:

How does one confront the truth that the New Deal obviously did move in new directions, in some ways quite dramatically, and still keep the old order intact? And how is it that, although the old order remained basically untouched and even preserved, Roosevelt and the New Dealers were able to win the everlasting gratitude of the dispossessed and the white working class?

Radosh does admit that the New Deal was reformist, “But reform is not revolution. Revolution means a substantive fundamental change in the existing social structure, a massive dislocation and revamping of the existing system of production and distribution.”

The New Deal reforms though:

were not mere “incremental gestures.” They were solidly based, carefully worked out pieces of legislation. They were of such a character that they would be able to create a long-lasting mythology about the existence of a pluralistic American democracy, in which big labor supposedly exerts its countering influence to the domination that otherwise would be undertaken by industry.

Radosh analyzes three key New Deal reforms: the National Recovery Act, the Wagner Act, and Social Security. Radosh shows how these reforms were, for the most part, brought about by agreement and cooperation between the corporate elite, established labour, and politicians and government bureaucrats.

Radosh criticizes the view of liberal writers like Arthur Schlesinger Jr. who claim that before Roosevelt’s policies were given full approval, “One after another, business leaders appeared before House and Senate Committees to invest such dismal prophecies with what remained of their authority. Republicans in the House faithfully reflected the business position.”

Radosh responds,

Of significance are Schlesinger’s last words, “the business position.” This telling phrase reveals the ideological mask on reality that helps to hide the manner in which the corporate state maintains its hegemony over the country. Schlesinger not only overstated big-business opposition; he did not account for the support given Social Security by moderate yet powerful representatives of the large-corporation community.

Radosh then takes a swipe at liberal historians in general:

The NRA reformers, unlike our contemporary liberal historians, understood that their program was meant to be a conservative prop to the existing order. They also realized the dire need to include social reform as an essential component of the corporate state. They understood that many liberals and even political radicals would overlook the conservative origin and effect of the NRA if reform, especially public works, was offered as part of a package deal.

In his concluding remarks, Radosh writes,

That many on the political left viewed the New Deal as “progressive” or “neosocialist” is also no clue to the meaning of New Deal policies…. The New Deal was conservative. Its special form of conservatism was the development of reforms that modernized corporate capitalism and brought corporate law to reflect the system’s changed nature.

For good measure I have included Radosh’ closing sentence. “Understanding how the New Deal worked will enable us to resist policies based on further extensions of the Welfare State, and to commit ourselves instead to the collective effort to forge a socialist community in America.” I will leave that for the reader to decide.

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In a previous post I discussed the Obama brand of corporatism existing presently under the premise of fixing the current recession. Similar rhetoric is now being used to explain the activities of Obama’s Economic Recovery Advisory Panel, now renamed the Council on Jobs and Competitiveness. What is necessary is cooperation between business and government, a pro-business government, a government that is willing to march hand in hand with business to make sure the economy can begin to recover, etc.

Some people in the main stream media have taken notice of this. In particular I would like to draw attention to an interesting article in The Huffington Post by Anis Shivani. Shivani writes,

The corporatist state generally refers to a tripartite political arrangement where government, business, and labor collaborate in policymaking, to avoid the overt impression of conflict and disorder. Labor is the weakest part of this equation in America today, but to the extent that it does have political power it is fully incorporated in the conceptualization and inception of policymaking.

Radosh’s own analysis of post Great-Depression state capitalism is as a power sharing scheme between big government, big business and big labour in order to rob the tax payers and productive class seems to fit well with Shivani’s own claims made about four decades later.

Furthermore, Shivani writes, “Corporatism is a dirty word in the American lexicon because of its close historical association with fascism…”

Radosh also mentions the corporatist New Deal’s link to fascism when he writes: During the 1930s, many liberals viewed fascist economic theory as a promising alternative to what they considered the twin evils of an unreconstructed laissez-faire capitalism and a rampant increase of socialism.” Also, “To liberals, fascism appeared to be a system of planning that transcended classes and led to an equilibrium of contending social forces. Thus it was “essentially the theoretical appeals of corporatism that interested the liberals.”

Interestingly enough, the role of top executives from General Electric in the US government has not faded either. President of GE, Gerard Swope, before the election of FDR preached for massive centralization and cartelization of the US economy in the form of the Swope Plan. His ideas would later become reality with the policies of FDR’s National Recovery Administration. Today, Obama has recently appointed General Electric CEO Jeff Immelt to head a council on economic recovery. It seems that some things, even after almost 80 years, do not change.